Continuous payment authorities


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You may not have heard the term "continuous payment authority" before, but if you've ever subscribed to a service using a credit or debit card that results in recurring payments being made, you might have one on your account without realising it. So what are they and how do they work? We answer the questions...

What is a continuous payment authority (CPA)?

It's a recurring payment made on your credit or debit card that you have authorised a company to take. They're commonly used for payments to mobile phone networks, gyms, online subscription services and payday lenders. The value and regularity of the payments can be varied by the business claiming the payment.

What's the difference between a CPA and a direct debit?

Direct debits are set up by your bank or building society to come straight out of your current account and are relatively easy to manage with online banking. There's also the direct debit guarantee that protects you against any errors that are made, ensuring you get a full and immediate refund.

CPAs are different in that they apply to your card rather than your bank account and the payment instruction is held by the merchant requesting the funds, not your bank. As such, they can't be managed through online banking in the same way as direct debits and standing orders.

What are the benefits of CPAs?

One of the key benefits of CPAs for the merchant is that they're paid quicker than taking a payment via direct debit. This means that they can offer services where payment is required instantly. Transport for London's Oyster auto top-ups are paid via a continuous payment authority, as are top-ups on popular apps that you pay for a service through, like Starbucks and Uber.

They also allow you to benefit from services without a break in service should you forget to pay. Amazon Prime's recurring subscription fee is billed by CPA and if you have insurance products paid for on a card that "auto renew", these will be processed under a CPA.

Are there any disadvantages?

There are some outspoken critics of CPAs - and with good cause. You're effectively giving a company the right to debit your account without notice. Of course, reputable companies will act honourably and - should there be any sort of administrative issue - correct any errors that occur. But there's no guarantee in place detailing rules around timescales, as with direct debits. And even if errors are corrected, it can be an inconvenience having to contact the company to get a resolution.

There have been issues with companies who don't make it clear that you're agreeing to a CPA. Free trials online (often for beauty products) sometimes require you to enter card details and if you don't cancel during the trial period, you can find your card billed as part of a rolling subscription on a CPA.

How do I know if I have a CPA on my card?

It's difficult to tell whether you have a CPA attached to a card without examining your statements, as it's often not clear when you sign up to a service that you're setting up a CPA. If you have regular payments appearing on your credit card statement that you don't make in person or online, they're probably being made via a CPA. The same is true of payments that are being debited from your current account - if they're not flagged as direct debits or standing orders, they're probably CPAs on your debit card.

How can I cancel a CPA?

You can withdraw your authority to debit your account at any time. As the authority is held by the company who are taking the payment, you should contact them in the first instance. But this is sometimes easier said than done, and the Financial Conduct Authority have made it clear that you can cancel a CPA directly with your bank. CPAs must be cancelled by the end of the day before your account is due to be debited to avoid payment being made.

Do CPAs end if I close a card account?

Not necessarily. Some card issuers may still honour transactions made on a card for a short period after you request your account to be closed and you will need to cover these.

Can I get a refund for CPAs I didn't realise had been set up?

There's no scheme like the direct debit guarantee in place to protect consumers against administrative errors when processing CPAs, so it's down to the company who made the charge as to how they will deal with any request for a refund.

I cancelled a CPA but the payment has still been taken. Can I get a refund for that?

Yes. Contact your bank with the cancellation date and they should be able to refund your account.

Do CPAs get transferred if I switch my current account to a different bank?

Continuous payment authorities are linked to cards rather than bank accounts. The current account switch service moves direct debits and standing orders that are linked to your current account, but not recurring payments on a card. So if you have a CPA on your debit card and you wish to keep paying a provider in that way, you'll need to inform them of your new debit card details as issued by your new bank.

Allowing companies to debit an account without notice will make some people feel uneasy, but reputable companies should handle your account responsibly. CPAs can be beneficial, provided you know what you are agreeing to. So always make sure you are clear about what a company can bill you for and decide whether you are comfortable allowing them to have authorisation to apply charges.

If you have any problems with a CPA, contact the merchant straight away and tell them that you are withdrawing your authority for them to take payments from your card. If you can't reach them, contact your bank (contact details for TSB customers) and they can cancel the CPA for you.

Image credit: Ikon Images / Alamy Stock Photo

  • stephen-morris-square

    Stephen Morris, Deputy Editor



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